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Tuesday, December 18, 2012

In its first big policy shift since Facebook bought the photo-sharing site, Instagram claims the right to sell users' photos without payment or notification. Oh, and there's no way to opt out.

by Declan McCullagh (CNET)

Instagram said today that it has the perpetual right to sell
users' photographs without payment or notification, a dramatic policy shift
that quickly sparked a public outcry.

The new intellectual property policy, which takes effect on
January 16, comes three months after Facebook completed its acquisition of the
popular photo-sharing site. Unless Instagram users delete their accounts before
the January deadline, they cannot opt out.

Under the new policy, Facebook claims the perpetual right to
license all public Instagram photos to companies or any other organization,
including for advertising purposes, which would effectively transform the Web
site into the world's largest stock photo agency. One irked Twitter user
quipped that "Instagram is now the new iStockPhoto, except they won't have
to pay you anything to use your images."

"It's asking people to agree to unspecified future
commercial use of their photos," says Kurt Opsahl, a senior staff attorney
at the Electronic Frontier Foundation. "That makes it challenging for someone
to give informed consent to that deal."

That means that a hotel in Hawaii, for instance, could write
a check to Facebook to license photos taken at its resort and use them on its
Web site, in TV ads, in glossy brochures, and so on -- without paying any money
to the Instagram user who took the photo. The language would include not only
photos of picturesque sunsets on Waikiki, but also images of young children
frolicking on the beach, a result that parents might not expect, and which
could trigger state privacy laws.

Facebook did not respond to repeated queries from CNET this
afternoon. We'll update the article if we receive a response.

Another policy pitfall: If Instagram users continue to
upload photos after January 16, 2013, and subsequently delete their account
after the deadline, they may have granted Facebook an irrevocable right to sell
those images in perpetuity. There's no obvious language that says deleting an
account terminates Facebook's rights, EFF's Opsahl said.

Facebook's new rights to sell Instagram users' photos come
from two additions to its terms of use policy. One section deletes the current
phrase "limited license" and, by inserting the words
"transferable" and "sub-licensable," allows Facebook to
license users' photos to any other organization.

A second section allows Facebook to charge money. It says
that "a business or other entity may pay us to display your... photos...
in connection with paid or sponsored content or promotions, without any
compensation to you." That language does not exist in the current terms of
use.

Google's policy, by contrast, is far narrower and does not
permit the company to sell photographs uploaded through Picasa or Google+. Its
policy generally tracks the soon-to-be-replaced Instagram policy by saying:
"The rights you grant in this license are for the limited purpose of
operating, promoting, and improving our services." Yahoo's policies
service for Flickr are similar, saying the company can use the images
"solely for the purpose for which such content was submitted or made
available."

Reginald Braithwaite, an author and software developer,
posted a tongue-in-cheek "translation" of the new Instagram policy
today: "You are not our customers, you are the cattle we drive to market
and auction off to the highest bidder. Enjoy your feed and keep producing the
milk."

One Instagram user dubbed the policy change
"Instagram's suicide note." The PopPhoto.com photography site
summarized the situation by saying: "The service itself is still a fun
one, but that's a lot of red marks that have shown up over the past couple
weeks. Many shooters -- even the casual ones -- probably aren't that excited to
have a giant corporation out there selling their photos without being paid or
even notified about it."

Another unusual addition to Instagram's new policy appears
to immunize it from liability, such as class action lawsuits, if it makes
supposedly private photos public. The language stresses, twice in the same
paragraph, that "we will not be liable for any use or disclosure of
content" and "Instagram will not be liable for any use or disclosure
of any content you provide."

Yet another addition says "you acknowledge that we may
not always identify paid services, sponsored content, or commercial communications
as such." That appears to conflict with the Federal Trade Commission's
guidelines that say advertisements should be listed as advertisements.

Such sweeping intellectual property language has been
invoked before: In 1999, Yahoo claimed all rights to Geocities using language
strikingly similar to Facebook's wording today, including the
"non-exclusive and fully sublicensable right" to do what it wanted
with its users' text and photos. But in the face of widespread protest -- and
competitors advertising that their own products were free from such Draconian
terms -- Yahoo backed down about a week later.

It's true, of course, that Facebook may not intend to
monetize the photos taken by Instagram users, and that lawyers often draft
overly broad language to permit future business opportunities that may never
arise. But on the other hand, there's no obvious language that would prohibit
Facebook from taking those steps, and the company's silence in the face of
questions today hasn't helped.

EFF's Opsahl says the new policy runs afoul of his group's
voluntary best practices for social networks. He added: "Hopefully at some
point we'll get greater clarity from Facebook and Instagram."

Saturday, October 27, 2012

Even
Apple's iPhone 5 couldn't slow Samsung Electronics down. The
Korean conglomerate's flagship Galaxy S III had
four of its five best-selling weeks in the U.S. after the
iPhone 5 was unveiled, Samsung told CNET.

The spike after the iPhone 5 launch
suggests that consumers hung around to see what Apple had to show off, weren't
impressed, and went with a Galaxy S III instead.

"I was shocked by the
numbers," Kevin Packingham, chief product officer of Samsung's U.S. mobile
arm, said in an interview. "I thought: 'What the heck is going on
here?'"

It's
just the latest bit of good news for a company that has enjoyed a remarkable
run to the top of the smartphone business, allowing it to surpass Apple
and dominate with a flagship brand that has virtually the same
appeal as the iPhone.

Samsung
is poised to continue its run into the holidays as it drums up attention for
its latest product, the extra-large Galaxy Note 2. In
typical Samsung fashion, the company on Wednesday threw a splashy party for
media, d-list celebrities, and select Samsung fans in Manhattan's old Post
Office headquarters, capping off the night with a performance by Kanye West.

Friday, August 24, 2012

After 21 hours of deliberation, a nine-person jury has sided with Apple on a majority of its patent infringement claims against Samsung Electronics. The jury also awarded Apple more than $1 billion in damages.

Apple had originally sought $2.75 billion in damages, and though it wasn't unanimous on all counts, the verdict was overwhelmingly in Apple's favor. Samsung, which asked for $421 million in its countersuit, did not receive a nickel. (Refer to jury document at the end of this story.)

The scorecard highlights:

Jury found Samsung infringement of Apple utility, design patents for some (though not all) products.

Jury found willful infringement on five of six patents.

Jury upheld Apple utility, design patents.

Jury upheld Apple trade dress '983.

Jury found Samsung "diluted" Apple's registered iPhone, iPhone 3, and "Combination iPhone" trade dress on some products, not on others.

Jury found no Apple infringement of Samsung utility patents.

Jury found Samsung did not violate antitrust law by monopolizing markets related to the UMTS standard.

Damages owed by Samsung: $1.05 billion.

The jury informed the court at 2:35 p.m. that it had reached a verdict, which was read in front of District Judge Lucy H. Koh as soon as the parties were assembled. The speed of the verdict apparently came as a surprise: One of Apple's lawyers walked into the courtroom wearing a polo shirt and jeans, so clearly he wasn't expecting this today.

For Apple, information revealed during the trial included prototypes of iPhone and iPad designs that never saw the light of day, as well as highly detailed financial data that went far beyond what the company typically makes public. There were also e-mails between executives, one of which included mention of high interest in a smaller version of the iPad.The trial, which stretched more than three weeks, was characterized by a bewildering and massive trove of evidence that unveiled some of each companies' biggest secrets. By any measure, this was a complex case that presented jurors with page after page of technical minutiae. To reach their decision, jurors had to work through a 20-page document that required them to discern which devices from the two companies infringed on which patents -- a daunting task considering Apple had accused nearly two dozen of Samsung's devices of violating patents.

For Samsung, it was a series of damning internal documents, many of which showed that the company looked to Apple's devices for cues when designing its software icons and general features. One such internal report contained numerous side-by-side slides in which the company put a prerelease version of its initial Galaxy smartphone next to the iPhone and offered suggestions on how to make the Galaxy more similar to the Apple device.

Historians may want to note that all this took place as Tim Cook celebrated his first anniversary as CEO.

Tuesday, July 31, 2012

It's not often we get a shakeup in the email world, but say hello toMicrosoft's new free email account, Outlook.com. It'll eventually be replacing Hotmail, but you might want to grab your name now. There's a new, clean look and it ties in your social media contacts. It's not too far off from what you may be used to already in Gmail, as you'll be able to tell fromCNET's full overviewof the features.

Pundits will no doubt say that Microsoft has a case ofAppleenvy and suggest that the company is finally embracing the highly successful "Apple model," in which the operating system maker also makes its own hardware.

In fact, Microsoft's announcement will be more in line with the "Googlemodel."

The Google model is to have it both ways -- making hardware, but also licensing your OS to hardware partners who make products of their own. Google partners with OEMs for smartphone handset and tablet hardware. But it alsoacquired Motorola, which makes Android hardware.

The Motorola acquisition isn't Google's first foray into hardware sales and direct competition with hardware vendors. Google launched its Nexus One smartphone handset in early 2010. Although that phone was technically manufactured by one of Google's partners, HTC, it was sold by Google and branded as a Google phone. As it turned out, Google didn't like the support part of the hardware business and decided to exit that line of work for a while, but it had let its partners know that it was willing to compete with them.

Traditionally, the assumption has been that you must either partner with hardware companies to manufacture systems for your operating system (the Microsoft model) or not allow other companies to make hardware for your platform (the Apple model).

A hybrid approach has been considered suicidal because competing with your partners puts you in a gray area where you have hardware competition and fragmentation, but you also have a smaller number of partners who are also less committed and more distrusting.

But times are changing.

Microsoft's application of the Microsoft model to mobile hasn't worked out. A bigpartnership with Nokia has been a flop. The software vendor has fared badly in the mobile market, far outpaced by Apple, which uses the Apple model, and Google, which uses the Google model.

When Google announced its bid to acquire Motorola -- effectively declaring its intention to compete with its hardware partners -- many pundits predicted disaster for the company. But the disaster never happened. Google is getting away with it. Android OEMs are continuing to churn out more innovative and exciting hardware, and they don't seem vexed by the prospect of competing with the company that makes the operating system they use.

Sunday, May 27, 2012

Less than a week afterFacebook's initial public offering, the social networking firm's new shareholders Wednesday filed a class action lawsuit against the company, CEO Mark Zuckerberg, Morgan Stanley and others.

Facebook officials and its investors could have cause for concern as the lawsuit was filed by Robbins Geller Rudman & Dowd LLP, a San Diego-based law firm that won $7 billion for Enron shareholders from the energy firm's investors.

"[Depending] on how this plays out, it could be a big deal if they did something wrong," said Zeus Kerravala, an analyst at ZK Research. "We live in such a litigious society that if they are found having hidden information, they could wind up paying out millions of dollars."

On top of the lawsuit,the IPO also is reportedly being investigatedby the U.S. Securities and Exchange Commission and the Financial Industry Regulatory Authority, an independent securities regulator.

Eyebrows were initially raised last Friday when the Facebook's shares failed to hit $50 to $90 a share last Friday after the IPO as some experts had expected. The first day of trading instead ended with a stock price just slightly above it's $38 offer price.

On Monday, the share price sunk to about $34, and then declined a few dollars more yesterday.

Concerns about the offering were further raised late Monday when Reuters reported thatanalysts at Morgan Stanley, the lead underwriter for the IPO, had cut their Facebook revenue forecasts without informing most investors.

The lawsuit notes that 421 million shares of Facebook sold in the IPO. Earlier today, shares were trading for around $31 per share.

"While defendants pocketed billions of dollars ... plaintiffs and the Class have suffered losses of more than $2.5 billion since the IPO," the legal complaint alleges.

In the months before Facebook's IPO, there was mounting excitement that reached something of a frenzy early last week. Facebook's name filled newspaper and online headlines and was the talk on television newsrooms and around office break rooms.

At the same time, the company did take a few stumbles in the days leading up to the IPO.

For instance,Zuckerberg was publicly chastisedfor wearing jeans and a hoodie sweatshirt during a presentation to buttoned-down Wall Street investors. His casual appearance left some wondering whether the 28-year-old had the maturity to run a major public company.

And as questions arose aboutFacebook's abilityto monetize its growing base of mobile users, General Motors pulled plans for a major ad buy, explaining that its advertising on Facebook wasn't working as expected.

The lawsuit, the SEC investigation and all the bad press "will hurt the firm's image massively and may force a change at the top," said Rob Enderle, an analyst with the Enderle Group, who suggested that Facebook hire a professional disaster management team.

Wednesday, May 16, 2012

At an investor conference, an exec says the carrier is killing the plan for "grandfathered" customers and will force existing and new customers to sign up for a tiered "data share" plan on its 4G LTE network.

byMarguerite Reardon (CNET)

Verizon Wireless subscribers who have held onto their $30-a-month unlimited data plans will soon be forced to upgrade to a new tiered offering the company plans to launch this summer, according to theWeb site Fierce Wireless.

Speaking at the J.P. Morgan Technology Media and Telecom conference today, Verizon Communications CFO Fran Shammo told investors that the company's 3G unlimited data plans that customers were allowed to hang onto last year when Verizon switched to a tiered offering will soon go away entirely. Instead, the company will migrate its existing and new 4G LTE customers to a new "data share plan."

The company has yet to announce the details of this new plan, but it has said previously that the data share plan will be introduced in midsummer. The plan will allow people on the same family plan to share buckets of data each month, much like they share voice minutes and text messaging. It will also allow individuals to share data across different 4G LTE devices.

Verizon eliminated its unlimited data plan for smartphone users last July, about a year after AT&T had done the same thing. Like AT&T had done previously, Verizon told its existing unlimited data plan customers that they could keep their unlimited data plans even after their contracts expired. And Verizon has allowed its 3G wireless subscribers to upgrade to 4G LTE devices, while keeping their unlimited data plans.

But the company was always careful to say that it could change this policy in the future. And now it looks like that day has finally come. The way it will likely work is that as 3G unlimited contracts expire, Verizon will push subscribers to upgrade their devices to smartphones on company's 4G LTE network. These customers will then have to sign up for the data share plans.

"Everyone will be on data share," Shammo said, according to Fierce Wireless. "When they migrate off 3G they will have to go to data share. That is beneficial to us."

Verizon hasn't yet announced pricing details of the new share plans. Shammo said that he believes this new plan will make it easier for families and small businesses to connect multiple devices, Fierce reported. This new plan is meant to encourage people to buy multiple connected devices and to use them on the 4G LTE network, without signing up for an additional data plan.

As this change happens and people connect additional devices to their accounts, Shammo said that the industry will have to change how they account for the revenue. Instead of looking at average revenue per user, he said that the industry should look at average revenue per account.

News of the end of the unlimited data plan is sure to upset some consumers who have held onto their existing accounts specifically for the unlimited benefit.

AT&T also offers this benefit to longtime smartphone customers. But the company has struggled to keep up with the demands of some of these users. In an effort to ensure that "grandfathered" unlimited users don't hog the network, the company began slowing down a proportion of these heavy users. The move outraged many customers. One man sued AT&T in small-claims court and won. AT&T has since changed its policy and now only slows down or throttles users if they exceed 3GB of data per month.

Meanwhile, T-Mobile USA and Sprint Nextel still offer unlimited data plans. T-Mobile also slows down users if they consume too much data each month. But Sprint claims that it is the only major wireless carrier in the U.S. to still offer unfettered unlimited data. Some people question how long the carrier will be able to offer such a plan given the steep rise in data usage.

Tuesday, May 15, 2012

GM to drop Facebook ads due to low consumer impact

DETROIT/SAN FRANCISCO, May 15 (Reuters) - General Motors Co said on Tuesday it will stop advertising on Facebook, even as the social networking website prepares to go public.

While GM gave no specific reason for dropping Facebook ads, a source familiar with the automaker's plans said the company's marketing executives decided Facebook's ads had little impact on consumers.

While GM's decision could be an exception in the advertising world, it marked the first highly visible crack in the Facebook strategy, said Brian Wieser, Internet and media analyst at Pivotal Research Group.

"This does highlight what we are arguing is the riskiness of the overall Facebook business model," he said. "It is not a sure thing. It sure looks likely that it will be one of the most important ad-supported media properties, but it's not certain because there will be marketers who are challenged to prove the effectiveness of the marketing vehicle."

Facebook Inc, founded eight years ago by Mark Zuckerberg in a Harvard dorm room, is expected to start trading on theNasdaqon Friday. The world's No. 1 social networking site raised its IPO price range on Tuesday, potentially giving the company a valuation of more than $100 billion.

An executive at another large consumer products company said the issue with advertising on Facebook is nobody really knows yet if it works better than traditional media and is worth the money spent. "Is it just a shiny new object, or is it a real value proposition?" said the executive, who asked not to be identified.

GM said it will still have Facebook pages, which cost nothing to create, to market its vehicles. GM pays no fee to Facebook for its pages, which allow the automaker to reach consumers directly.

GM said it regularly reviews how it spends its marketing budget and adjusts its approach as needed.

"It's not unusual for us to move our spending around various media outlets - especially with the growth of multiple social and digital media outlets," the company said in a statement.

"In terms of Facebook specifically, while we currently do not plan to continue with advertising, we remain committed to an aggressive content strategy through all of our products and brands, as it continues to be a very effective tool for engaging with our customers," GM said.

NO. 3 U.S. ADVERTISER

GM spends about $40 million on its Facebook presence, but only about $10 million of that is paid to Facebook for advertising, according to the Wall Street Journal, which first reported GM's plans to drop Facebook ads. The remaining budget covers the creation of content and the advertising and media agencies involved, the newspaper said.

GM, the country's third-largest advertiser behind Procter & Gamble Co and AT&T Inc, spent $1.11 billion on U.S. ads last year, according to Kantar Media, an ad-tracking firm owned by WPP Plc. About $271 million of the total GM spent for ads last year was for online display and search ads excluding Facebook advertising.

Facebook ads make up a small percentage of GM's advertising budget, but the company said it is committed to the website to market its vehicles.

For instance, the Facebook page for the Chevrolet Sonic small car as of 2000 GMT on Tuesday had more than 423,000 "likes." The first three months of Sonic's marketing campaign which began last October were exclusively digital, with TV ads not running until early this year.

REACHING YOUNGER CONSUMERS

While GM rival Ford Motor Co said it was committed to advertising on Facebook, the social media site is just one part of the No. 2 U.S. automaker's marketing strategy. Ford also is boosting its spending on Facebook, including ad buys.

"You just can't buy your way into Facebook," said Ford spokesman Scott Monty. "You need to have a credible presence and be doing innovative things."